Two days ago the Massachusetts voters chose a candidate to fill the vacancy in the Senate left by the passing of Edward Kennedy. Republican Scott Brown defeated Democrat Martha Coakley’s by five percentage points, 52% to 47%. Brown’s victory was even more impressive considering that Democrats enjoy a more than 3 to 1 advantage over Republicans in voter registration in Massachusetts. In addition, Brown was down 20 points in the polls just a few weeks ago. Something remarkable happened, but what was it?

Republicans say the election was in part a referendum on the health insurance reform legislation passed by both houses of Congress and currently undergoing the reconciliation process. Democrats disagree. They blame the bad economy and an inept campaign run by Coakley.

I am not a professional pundit, but I believe it was the former: Health care insurance reform was definitely on the ballot on Tuesday. Massachusetts voters are politically sophisticated. After all, this state is produced three presidential nominees in the last 50 years (John Kennedy, Michael Dukakis, and John Kerry). It also has produced two candidates who were runners up for their party’s nominations (Ted Kennedy and Mitt Romney). Bay Staters knew that the Democrats’ super-majority in the Senate was on the line, and that the loss of even a single vote in the Senate could jeopardize the health care insurance reform legislation that passed with just the 60 votes needed to end a filibuster. Brown put the health insurance reform debate front and center in his campaign, vowing to vote against the legislation if elected.

That is what the people of Massachusetts elected Brown to do. The message they sent to Washington is loud and clear: “Enough! The health insurance reform bill passed by the Senate must be stopped. It is fatally flawed. Scrap it and start over.”

Massachusetts is not alone in its low opinion of the health insurance reform bills passed by the House and Senate. Only 35% of voters nationwide support the bill.

This is not to say we should abandon health insurance reform altogether. The loss of the filibuster-breaking majority should force Democrats to listen to and even incorporate some of the Republican proposals, such as limiting jury awards for medical malpractice, which would reduce the need for doctors to practice costly “defensive medicine.” Congress also should allow health insurance providers to compete across state lines, driving down costs through competition. It could even set up a discreet, transparent fund to pay for the medical needs of the truly “uninsurable,” rather than destroying the actuarial foundation of health insurance by forcing health insurance companies to accept all patients regardless of their health. Such measures would lower the cost of health insurance for everyone, making health insurance more affordable to millions and reducing the number of the uninsured—all without threats of IRS fines and jail time for scofflaws.

The colored lights and ornaments packed away, the holiday season is behind us. Among the bounties of the season, the U.S. Senate added a new health care insurance reform bill passed on Christmas Eve. Whether this is a gift that keeps on giving or a white elephant to be hidden in a closet remains to be seen.

First the Senate bill must be reconciled with health insurance reform legislation passed earlier in 2009 by the U.S. House of Representatives. The integrated legislation will then be up for debate in both Houses, with the Democratic leadership keen on delivering a final bill to the president later this month or early next. We do not know precisely what the final bill will look like, but the rough outline suggests it will include these major provisions:

• Every legal resident of the United States must have health insurance through his or her employer, Medicare, Medicaid, S-CHIP, or private individual insurance, whether they want it or not.

• Failure to be insured will be punishable by fines, or jail, or both.

• Compliance with the health insurance requirements will be enforced by the Internal Revenue Service (IRS), which will have the power to levy and collect fines just as it collects back taxes.

• Individuals and families earning up to four times the poverty level—roughly $80,000 a year for a family of four—will be eligible to received tax credits to offset the cost of buying health insurance.

• The government will sponsor low-cost health insurance exchanges that will offer health insurance through private companies with federally mandated costs and coverage.

• Private companies employing fifty or more employees will have to offer group health insurance to their employees or face fines of up to $750 per uninsured employee.

• Health insurance companies will be barred from excluding or delaying coverage to people with pre-existing health conditions.

• Health insurance companies will be limited in what they can charge based on age, gender, or preexisting health conditions.

• Health insurance companies will be required to pay benefits without lifetime limits.

In my next post, I will apply the First Principles of Health Insurance from my last post to each of these new regulations. In the mean time, we will await the final form of the bill, knowing that none of it will actually take effect until 2013 or 2014. In other words, if you do not have health insurance now, do not wait for these laws to take effect.